Systemic Risk and Tail risk of Fintech firms during COvid-19: A Case of Southeast Asian economy

Abstract

The primary objective of this study is to contrast the tail risk that is encountered by Thai financial technology companies with the systemic risk that is encountered by financial technology companies in Thailand. During the COVID-19 outbreak, it was also investigated how the effects of tail risk and systemic risk affected Thailand's financial technology businesses. During COVID-19, the number of individuals using financial applications online surged drastically, giving clear proof of the sector's stratospheric ascent. During the same time period, the number of people using cryptocurrency apps increased dramatically. This is the first study of its sort, and it analyzes how tail risk, systemic risk, and fintech interact with one another using data from a sample that is typical of the Thai economy. The financial technology sector is the primary focus of our study. December 2019 and February 2022 will be used as the computation periods for the data of the fintech companies. Fintech businesses in Thailand look through the theoretical lens provided by the extreme value theory when calculating the tail risk of their portfolios. The fall in the value of technology businesses has given rise to the idea of establishing a significant number of financial technology companies located in Thailand. A lengthier and more widespread dispersion is consistent with an exponential growth of fintech businesses in Thailand during the course of the COVID-19 time period. There are a few businesses in our sample that have very short tails, which suggests that they are much too susceptible to unfavorable occurrences during COVID-19. The results indicate that the global technology index during COVID-19 is reliant on the systemic risk posed by Fintech. It's possible that these outcomes might be attributed to the large growth in customer bases seen by FinTech businesses during COVID-19. Fintech companies in Thailand saw significant growth during the epidemic of swine flu. The current research is among the first of its type when it comes to grasping the issues of tail risk and systemic risk in fintech enterprises in Thailand. This is excellent news for policymakers, financial experts, and academics, as it paves the way for a better understanding of these issues